Exclusive: The Koch brothers' secret bank

An Arlington, Va.-based conservative group, whose existence until now was unknown to almost everyone in politics, raised and spent $250 million in 2012 to shape political and policy debate nationwide.

The group, Freedom Partners, and its president, Marc Short, serve as an outlet for the ideas and funds of the mysterious Koch brothers, cutting checks as large as $63 million to groups promoting conservative causes, according to an IRS document to be filed shortly.

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Inside Koch brother's secret bank

Obama holds cabinet meeting on Syria, health care

The 38-page IRS filing amounts to the Rosetta Stone of the vast web of conservative groups — some prominent, some obscure — that spend time, money and resources to influence public debate, especially over Obamacare.

The group has about 200 donors, each paying at least $100,000 in annual dues. It raised $256 million in the year after its creation in November 2011, the document shows. And it made grants of $236 million — meaning a totally unknown group was the largest sugar daddy for conservative groups in the last election, second in total spending only to Karl Rove’s American Crossroads and Crossroads GPS, which together spent about $300 million.

Short, a soft-spoken but ferociously conservative 43-year-old operative, provided us a draft of a forthcoming IRS filing that will soon be available to the public. Short, like most in the Koch empire, feels wealthy conservative activists such as Charles and David Koch get a bum rap from the media. So, Short wants to ease his groups and their cause out of the shadows.

“There’s a mystery around us that makes an interesting story,” Short said in an interview in his conference room. “There’s also a vilification that happens that gets exaggerated when your opposition thinks you’re secretive. Our members are proud to be part of [the organization].”

Democrats have their own vast web of secretive funders — and Short is right: Few liberals got as much scrutiny as the Koch brothers over the past few years.

But the “proud” donors are not so proud they will publicly identify themselves as donors. Short refused to open up about the men and women behind the quarter-billion-dollar fund, beyond saying that Koch-linked entities provided a “minority” of the funds and that the largest single donor gave about $25 million.

Freedom Partners is organized under the same section of the Tax Code as a trade association, a 501(c)6, which allows the group to conceal its donors from public release, although the amounts and recipients of its major grants are public.

The filing offers a rare tour of the conservative movement and how it gets its funds:

• Center to Protect Patient Rights, a group that vehemently opposes Obamacare: a total of $115 million, from three grants.

• Americans for Prosperity, an organizing and advocacy group that is courted by Republican presidential candidates: $32.3 million.

• The 60 Plus Association, a free-market seniors group that also opposes Obamacare: $15.7 million.

• American Future Fund, an Iowa group that spent a lot of money on ads in 2012, many for Mitt Romney: $13.6 million.

• Concerned Women for America Legislative Action Committee, which gets involved in a number of social policy debates: $8.2 million.

• Themis Trust, a Koch-based voter database that is made available to other conservative organizations: $5.8 million.

• Public Notice, a fiscal policy think tank: $5.5 million.

• Generation Opportunity, a group for “liberty-loving” young people: $5 million.

• And several groups — including the State Tea Party Express, the Tea Party Patriots and Heritage Action for America — got less than $1 million each.

Members are drawn from the Koch brothers’ semiannual conferences, a 10-year-old tradition that draws top politicians — including, last month, House Majority Leader Eric Cantor (R-Va.) and House Budget Committee Chairman Paul Ryan (R-Wis.). Many seminar attendees also give directly to Koch-approved groups, and the Freedom Partners funds do not include the Kochs’ many gifts to university think tanks.

Short says his members are “concerned that the nation that they grew up in and that their businesses have flourished in will not be there for their children and grandchildren,” and are “committed to trying to restore what they view are free markets in a free society in America.” Many, he said, are “Horatio Alger-type stories,” most of them not household names, who got rich after starting small businesses, from service to manufacturing to information technology: “They are really worried about the country that’s going to be left for their future generations.”

Freedom Partners now has 48 employees. The executive director is Richard Ribbentrop, a former head of the New York Stock Exchange’s Washington office, who was chief of staff to former Sen. Kay Bailey Hutchison and longtime legislative director to Sen. Phil Gramm, both Texas Republicans. At Hutchison’s office, Ribbentrop hired Short, who succeeded him as chief of staff. Short later was chief of staff to then-Rep. Mike Pence (R-Ind.), who was chairman of the House Republican Conference, and is now governor of Indiana. The Freedom Partners vice president of strategic communications is James Davis, who was communications director of the 2012 Republican National Convention.

The group has five directors: Short; Wayne Gable, a longtime Koch Industries employee who was the new group’s first director and holds a Ph.D. in economics from George Mason University; Richard Fink, a Ph.D. in economics who is president of the Charles G. Koch Charitable Foundation; Kevin Gentry, a Koch official and vice chairman of the Republican Party of Virginia; and Nestor Weigand, a board member of Regal Entertainment Group and former president of the National Association of Realtors.

We asked Short what he has to show for all that money spent in 2012, when Republicans failed at a within-reach effort to take back the Senate and Romney left the GOP in a deep hole by getting wiped out among some demographic groups, including Hispanic and Asian voters. “Our members are committed to the long term,” Short said, “not to one individual cycle.”